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SB 2400

A BILL for an Act to create and enact a new section to chapter 12.1-23 and chapter 15.1-27.1 of the North Dakota Century Code, relating to the creation of a criminal offense for the misuse of education savings account funds and the establishment of the education savings account program; to amend and reenact section 15.1-20-02 of the North Dakota Century Code, relating to exceptions to compulsory school attendance; to provide a penalty; to provide an appropriation; and to provide a continuing appropriation.

69th Legislative Assembly (2025-26) Introduced by Michelle Axtman and 5 co-sponsors

ND bill would create Education Savings Accounts (ESA) funded by a state fund for eligible students to pay nonpublic tuition and related education costs, with penalties for misuse.

Second reading, failed to pass, yeas 14 nays 78
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Bill Summary · SB 2400

SB 2400 — Summary (North Dakota)

Status: Second reading — failed to pass (Apr 24, 2025; yeas 14, nays 78). Introduced: Mar 12, 2025.

Purpose

Establishes an Education Savings Account (ESA) program administered by the Superintendent of Public Instruction, creates a dedicated ESA fund with a continuing appropriation, defines eligible uses of ESA funds, adds criminal penalties for misuse of ESA funds, and adjusts exceptions to compulsory attendance law to account for program participation. The bill also included a proposed appropriation to start program administration.

Key provisions

  • Definitions: Establishes terms such as “eligible student,” “parent,” “participating school,” and “education service provider.”
  • ESA fund: Creates an Education Savings Account Fund in the state treasury. Moneys appropriated to the superintendent for the program are continuously appropriated for ESA payments.
  • Administration: The Superintendent is the ESA program administrator and must:
    • Publish a standard application; run outreach (multimedia) and web/phone support; ensure strong technology/security and reduce fraud; adopt implementing rules.
    • Contract with third-party administrators, conduct audits, and bar noncompliant participating schools/providers.
    • Report evidence of misuse to law enforcement and notify parents of IDEA-related consequences when ESA funds pay tuition/fees at a nonpublic school (parental placement).
  • Eligible students: Elementary/secondary residents eligible to attend public school who have not graduated high school or reached 21.
  • Qualified expenses: Broad list includes nonpublic tuition/fees; textbooks; tutoring/therapy; curricula and software; nonpublic online schooling; vocational/life-skills tuition; services/materials for students with disabilities (including paraprofessionals); standardized test/AP fees; dual-credit tuition; meals in school buildings; mental health assistance; medically necessary appointments (for educational benefit); educational camps; plus additional items via rules.
  • Enrollment and payments:
    • Parents may apply Jan 1–June 30 before the school year.
    • Superintendent (or designee) must notify approval within 30 days and deposit the student’s ESA into an individual account within 30 days of application but no later than July 15.
    • Funds are immediately available to parents for qualified expenses; unspent funds revert to the ESA fund at fiscal year end.
    • Program intended to begin with the school budget year starting July 1, 2026 (various draft versions set specific per‑student payment amounts and income tiers for nonpublic attendance).
  • Criminal penalties for misuse (new section to chapter 12.1‑23):
    • Misuse (spending on non‑qualified items or intentionally failing to provide paid educational services) is criminalized.
    • Penalty tiers by amount/value: class A felony (> $50,000); class B felony (> $10,000–≤ $50,000); class C felony (> $1,000–≤ $10,000); class A misdemeanor (> $500–≤ $1,000); class B misdemeanor (all other cases).
  • Appropriation: One draft included a $3,000,000 appropriation to the Superintendent for administering the program for FY 2026 biennium (July 1, 2025–June 30, 2027). The bill language across versions also provides for continuing appropriation of fund balances.

Who is affected

  • Primary: parents and eligible students (public, nonpublic, and home‑educated), participating nonpublic schools and approved education service providers.
  • Administrative: Superintendent’s office (program operations, audits, enforcement).
  • Fiscal: State treasury (new fund, proposed appropriation), public school funding may be indirectly affected depending on enrollment shifts.
  • Students with disabilities: parents who use ESA funds for nonpublic tuition are notified that IDEA protections may not apply (parental placement effect).

Procedural / timeline notes

  • Application window each year: Jan 1–June 30 for the following school year; deposits no later than July 15.
  • Effective operation target: school budget year beginning July 1, 2026 (per draft language).
  • Legislative progress: introduced March 12, 2025; multiple amendments considered in committee and on floor; failed second reading April 24, 2025 (did not advance).

Compiled from official sources — confirm details with the bill’s official record.

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